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Svetlana Guineva

Svetlana Guineva Writer

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Top 5 States to Open an Auto Dealership

It’s everywhere in the news – month by month auto sales are climbing up nationwide. Yet, not all states are the same and a look at the statistics for 2012 can reveal a lot about which are the better performing ones.

If you are considering opening your own car dealership, or already have one and want to use the growing market as an opportunity to expand to more places, knowing the figures can help you make your next move. Each year, the National Automobile Dealers Association (NADA) issues a comprehensive state-of-the-industry report to help auto dealers learn more about their field. Based on the information provided in it, let’s take a look at the 5 best states to open an auto dealership with the main criterion being average annual sales per dealership.

Use the statistics when deciding where you want to open your car dealer business. However, keep in mind that, regardless of the state, you will still need to apply for a license and a surety bond. Bryant Surety Bonds can help you get bonded quickly, even with a less than perfect credit score.

Oklahoma

Oklahoma's New Plate Has Been Selected
Photo credit: programwitch / Foter.com / CC BY-NC-SA

In 2012, an auto dealership in Oklahoma made an average of $68,633 in sales, a number confidently surpassing all other states. At the same time, initial and operating costs are not as high as these in many other places in the country. The licensing fees for both new-car and used-car dealership is $200 (plus $60 and $100 respectively for renewal) and auto dealer bonds are also among the lowest. Used-car dealers need a $15,000 surety bond, whereas new-car dealers only need to post a $10,000 one. Finally, weekly earnings of new-car dealership employees were $973 on average, which is below the national average.

Arizona

Arizona State Route 179
Arizona State Route 179
Photo credit: Dougtone / Foter.com / CC BY-SA

Number two goes to another Southwestern state, namely Arizona. Last year, the average dealership registered a total of $59,696 in sales. With an average weekly pay of $1,019 (for new-car dealership employees), Arizona payroll expenses aren’t as low as those of Oklahoma but they are still below the U.S. average of $1,030. Licensing can be a bit more costly because of a higher MVD bond requirement - $100,000 for new-car and used-car dealers and $25,000 wholesalers, but you can work with a surety bonds agency to get a good deal. Experts point to one more advantage of selling cars in Arizona – the state gets no snow, no salt on the roads and, therefore, used cars are better-kept and less likely to rust.

California

Driving along Highway 1
Driving along Highway 1
Photo credit: Images by John 'K' / Foter.com / CC BY-NC-ND

The Golden State comes third with average per-dealer annual sales of $56,836 for 2012. And while average weekly sales are among the highest in the country and there are numerous license fees, California remains one of the best places for auto dealers. New-car sales are especially promising and 2013 will likely see 60% more new vehicle sales compared to 2009. Moreover, despite recent skirmishes between local car dealers and Tesla Motors, hybrids and electric car sales in California continue to rise and are, as always, the highest in the country. Toyota is the safest bet when dealing in California, as it comprises a little more than a fifth of the new-vehicle market share.

Florida

miami art deco district
Miami Art Deco District
Photo credit: bollilaurent / Foter.com / CC BY-NC-ND

Florida is another great place to be an auto dealer. In 2012, new-car auto dealerships made an annual average of $55,128, whereas the employees of these dealerships earned exactly as much as the national average of $1,030. Summed up, dealer licensing fees might be a little more than $600, yet auto dealer bonds are relatively cheap - $25,000 for both used-car and new-car dealers, and a $10,000 one for recreational vehicle dealers. A good rule of thumb is to focus on foreign brands as Florida residents are statistically among the least likely to buy an American brand.

Texas

Dodge Ram 1500
Dodge Ram 1500
Photo credit: Joe Thomissen / Foter.com / CC BY-ND

Last, but not least, it’s the state of Texas that offers a favorable climate for car dealer businesses. New-car dealerships averaged $52,732 in yearly sales. Employees of new-car dealerships made an average weekly salary of $1,102 which is slightly higher than the average for the country, but auto dealer bonds requirements are among the lowest. Regular auto dealers only need to post a $25,000 auto dealer bond, whereas franchised ones are not even required to post one. Not surprisingly, since everything is big in Texas, pick-up trucks are the most sought after vehicles, with GM and Ford competing for the top position, followed by RAM.

 

Jeremy Alicandri
Svetlana, this was an interesting post, I learned a few new things! How does New York rank in this list? Thanks!
Kathi Kruse
Having been a dealer or manager my entire life in Southern California, I can attest to the great opportunity there is here. However, the land is scarce in metro areas and the cities (at least in So Cal) are not car dealer friendly. If you're contemplating the jump, bring a lot of money and don't forget your attorney. Just sayin'
r bolton
Annual average sales per dealership are in $ thousands. It would be nice if you could edit the article to mention that.
Svetlana Guineva
@Jeremy: Thank you for your comment! Here are some stats for NY: Average sales per dealership: $44,627 (higher than US average) Average weekly earnings of new-car dealership employees: $1,162 New-vehicle registrations have risen from 684,528 in 2009 to 868,459 in 2012 Hope that was helpful! @rbolton The figures are shown in thousands, otherwise it would have been specified that they are in millions.
Jeremy Alicandri
Interesting, but expected. Thank you for taking the time to share!

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